Oxysterols serve as both substrates and signal molecules in the cholesterol-utilizing pathways of mammalian cells. Their distribution and movement within these cells, however, have not been well characterized; therefore we have undertaken such an analysis. Radiolabeled cholesterol and 25-hydroxycholesterol were pulsed into the cell surface membranes of rat hepatoma cells and their esterification was determined. The esterification of both probes was stimulated by feeding cells lipoproteins, even though lipoprotein cholesterol might be viewed as a competitor. Unlabeled 25-hydroxycholesterol, another potential competitor, also stimulated the esterification of the cell-surface probes. Esterification of both sterols was inhibited by a variety of amphiphilic agents. This inhibition was reversed by unlabeled 25-hydroxycholesterol. In cells incubated at 15 degrees C the fractional rate of esterification of the oxysterol was more than 100 times greater than that of cholesterol. Furthermore, the time course of esterification of plasma membrane cholesterol but not that of 25-hydroxycholesterol, was lagged. In contrast, the rate of esterification of the two probes was similar in broken cells supplied with saturating cholesterol. Finally, the transfer of 25-hydroxycholesterol from red blood cells to plasma lipoproteins was approximately 2000-fold faster than that of cholesterol. We conclude that 25-hydroxycholesterol and cholesterol are moved between the plasma membrane and endoplasmic reticulum by a common transport mechanism but that the oxysterol enters this pathway much more rapidly, possibly through a passive transfer step akin to its unmediated transfer from red cells to plasma.